Lawmakers plan to vote next week on a bill that would suspend the minimum wage increase – now $10 an hour and slated to rise to $15 an hour by 2024 – in the event of an economic downturn.
They will also vote on a measure creating a task force to study the effect the minimum wage increase has on businesses, including their ability to hire new workers, whether they needed to cut hours or lay off workers to make ends meet, and whether they have switched to automation.
Under the first measure, Senate Bill 3607, the state-mandated pay increase schedule would be suspended in the event of a decline in employment and sales tax, at which point the suspension would be instituted on a year-by-year basis. The second scenario laid out in the bill would suspend the wage increase until the state regains revenue past 2 percent.
Both S3607 and Senate Bill 3608, which creates the 11-member task force, are scheduled for votes at the Nov. 14 Senate Labor Committee.
Under the original text of the bill, the task force would have until Dec. 31, 2019, to submit its first report, followed by a new one at the end of each year.
“This is something that New York and California did, it was common sense,” the main sponsor of the bills, Sen. Vin Gopal, D-11th District, told NJBIZ. “I don’t understand why the original bill didn’t have it.”
Both measures were introduced in March, a month after Murphy signed the measure setting New Jersey’s minimum wage on a path to $15 an hour. The rate will increase to $11 an hour in January.
Progressive groups have been staunchly opposed to the new measure, arguing it would mainly hurt lower-paid workers, something which Gopal has refuted.
“The bill uses broad and arbitrary metrics to pause increases in the minimum wage, cheating workers and families already struggling to make ends meet,” New Jersey Policy Perspective President Brandon McKoy said in a statement.
“With income inequality at an all-time high, this bill moves New Jersey in the wrong direction and rolls back one of the most consequential, pro-worker policies in state history less than a year after it was signed into law,” he added.
Gopal maintained that the minimum wage would still increase in line with the inflation rate, as laid out in a 2013 constitutional amendment.
“In the event of a recession or fiscal downturn, my legislation would simply limit the increase to the [consumer price index],” Gopal said. “Increasing the minimum wage substantially in the middle of a recession when businesses are scrambling because of reduced sales would only create more unemployment and slow our economic recovery.”
Talk about a suspension of the minimum wage go back to when the debate on the increase first started over a year ago. Business advocates remained happy with the proposal.
“If you talk to any economist, they’ll tell you that the next recession may hit within the next one or two years. So we feel this off-ramp is a critical protection for both businesses and state government, because the increase impacts state government as well,” New Jersey Business and Industry Association Vice President of Government Affairs Mike Wallace told NJBIZ.
Editor’s note: A previous version of this article incorrectly stated that Senate Bill 3607 would allow the state to indefinitely suspend the minimum wage increase if state revenue fell at least 2 percent year over year; S3607 would suspend the wage increase only until the state regains revenue beyond 2 percent.